Key sponsorship trends in the use of technology and data: Part 1 - Latest innovations

The inexorable rise of sponsorship revenues for rights holders continues unabated. Global estimates place revenues from sports sponsorship rising to beyond $45 billion,1 with a recent example of this upward drive being Chelsea’s new shirt deal with the Yokohama Rubber Company, estimated at $60 million per season over five years (more than double the amount paid by its previous shirt sponsor Samsung).

It is inescapable that sponsors’ deployment strategies must now involve digital activation and the use of new technology: sponsorships are no longer a physical manifestation of a brand, characterised only by billboards, shirt logos and corporate hospitality opportunities. Fan and consumer engagement can (and must) be achieved through non-traditional means and media. Equally, progressive rights holders consider their future commercial success to be allied to their ability to operate as viable digital media businesses, not simply sports clubs.

In recognition of this, this two-part piece examines the most recent trends in the digitisation and technological progression of sports sponsorship, looking at how these valuable partnerships have been deployed and the legal challenges associated with their deployment.

Part 2 (available here) looks at the legal considerations for rights holders and sponsors arising out of the use of such innovations, specifically in:

Contract

Data

The rise of the “E ambusher”

Advertising codes

Social media / event apps

Technology offers sponsors and rights holders exciting opportunities for the activation of partnerships. For example, the use of social media and event specific apps to promote a brand has, and will continue to be, a crucial way to engage with younger consumers.

During the tournament, #RWC2015 was used twice a second and over five million times in total; there were 270 million tournament related video views on social media channels; and the official App was downloaded 2.8 million times with use in 204 nations.2

Activation is not limited to Twitter and Facebook as rights holders (and in turn their sponsors) seek to differentiate themselves from their rivals. For example, shortly before El Clasico in November 2015, Real Madrid announced that it was teaming up with Snapchat to allow its users to create and share match specific content on the app (called a “Live Story”).3

Whereas this currently seems focused on fan engagement using only Real Madrid logos, it may be the case that football clubs let sponsors use branded content or apply brand specific filters (as is the case in the NFL where Skittles sponsors the NFL’s Live Story4).

Advertising and promotion using social media is now mainstream and this should be reflected in the relevant sponsorship agreement. The sponsor will be granted the right to use the rights holder’s intellectual property (typically their logo and other brand indicators) and player images in marketing and promotion on social media, within strict parameters.

It is these parameters that need to be carefully negotiated. How many tweets or Facebook updates are permitted? How will the post identify itself as promotional so as to comply with advertising codes?5 What will the approvals process be for social media posts?

The last point, in particular, is challenging given the need to strike a balance between maintaining the instantaneous, reactive appeal of social media and protection of the rights-holder brand. Thought should be given during contract negotiations to pre-agreed messaging or fields of use (or at least a process for pre-agreeing such messaging or fields of use before the event).

Beyond social media, some sponsors and rights holders are seeking more innovative ways to reach consumers and to differentiate themselves from their rivals.

Connected stadia

One interesting use of technology to immerse consumers in a more captivating environment is the advent of connected stadia, such as the Barclays Center in Brooklyn (transformed by Cisco’s “Connected Sports and Entertainment Solution”)6 and the Levi’s Stadium (home to the San Francisco 49ers) where use of wireless beacons offers Bluetooth connectivity to the fans.7 The possibility of pushing sponsor messages to a 49ers fan’s smartwatch at half time directing him or her to the nearest beer vendor in the Levi’s Stadium is now an achievable reality.

Virtual reality

Where fans cannot make it to the event itself, virtual reality provides sponsors with a wide variety of opportunities to raise their brand’s profile and engage fans in an innovative way.

Even now this form of virtual reality is big business: in 2014, Facebook paid $2bn to acquire virtual reality startup Oculus Rift. Mark Zuckerberg’s comments immediately after the acquisition demonstrate that he recognised the huge advertising and sponsorship potential of the technology:

"We’re not going to try to make a profit off the devices long term. We view this as a software and services thing…Where if we can make it so that this becomes a network where people can be communicating and buying things and virtual goods, and there might be advertising in the world."9

This new virtual sporting world provides not only a new form of content which can be licensed to broadcasters but also a forum for bespoke, customer targeted advertisements to be displayed.

Facial recognition

Connected stadia and virtual reality can both be used to drive brand recognition but they still rely on personal data to be provided from elsewhere (such as from the customer’s online purchasing history or by the customer manually inputting them) to provide personal content.

This is where facial recognition may become increasingly useful going forward. This technology has been used in some sports stadia for a while for security purposes and rights holders and sponsors are now recognising its marketing potential. At a more basic level, as part of their College 100 Sponsorship deal, Nissan are using an app that enables users to superimpose team specific face paint onto selfies (Nissan branding is also visible).10

Cycling retailer Wiggle has taken facial recognition a stage further and is now using it to measure a customer’s emotional reactions to messaging. This enables them to customise the campaign to make it more engaging for the customer.11 Again this technology provides a new and innovative way to interact with consumers to create personalised, content driven advertising for sponsors.

Wearable tech

Another method of collecting valuable data is from the use of a variety of wearable devices, be it glasses, watches or apparel, which incorporate tracking and monitoring technology. In their infancy these devices were restricted to the domain of the professional athlete where their focus was strictly on performance enhancement, however, these have now firmly made the transition to the amateur market in which amateur athletes can use data to track performance and share it with others via an app or online forum.12

This trend offers two key opportunities for sponsors and rights holders. Firstly, it means rights holders can offer (and therefore carve out in their sponsorship agreements with other commercial partners) a new sponsorship category of “official fitness tracker”. For example, Fitbit has signed a three-year deal to become the official fitness tracker sponsor of running organisation parkrun UK.13 Secondly, there is an opportunity for data from the devices to be collected, analysed and then used to tailor product promotions to the wearer.

That concludes Part 1. Part 2 of this piece (available here) moves on to explore the legal considerations arising out of the use of these technological innovations, specifically in:

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About the Author

Jon is a partner at Northridge Law. He provides commercial and corporate advice to clients. He has led on governance reforms for The FA, the launch of the Hockey Pro League for the FIH, Premier League kit sponsorships for Nike, and the WRU’s deal with its regional teams. With experience through secondments as Acting Head of Legal at IMG for Rugby World Cup matters and at Brawn GP F1 team, he balances legal expertise with first-hand understanding of the way in which client’s businesses work.

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Paul is a Managing Associate at Northridge. He specialises in commercial and regulatory advice to clients in the sports and media sectors. Paul’s experience includes acting for athletes, brands and rights holders on sponsorship, licensing and merchandising programmes. He also regularly advises on governance issues and financial regulation in the sport and on player contracts, football transfers and image rights structures.

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